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Foreign Direct Investment and Trade: A Causality Analysis

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Abstract

In this article, we analyze the relationship between outward foreign direct investment (FDI) and exports, using Spanish quarterly data for the period 1977–1998, by means of Granger causality tests in a cointegration framework. Our results point to the existence of a relationship of complementarity between both variables, with Granger causality running in the short run from outward FDI to exports, and bilateral Granger causality in the long run.

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Authors and Affiliations

  1. Departamento de Economía, Universidad Pública de Navarra, 31006, Pamplona, Spain

    Oscar Bajo-Rubio

  2. Departamento de Fundamentos da Anālise Econōmica, Universidade de Vigo, 36200, Vigo, Spain

    María Montero-Muñoz

Authors
  1. Oscar Bajo-Rubio
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  2. María Montero-Muñoz
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Bajo-Rubio, O., Montero-Muñoz, M. Foreign Direct Investment and Trade: A Causality Analysis. Open Economies Review 12, 305–323 (2001). https://doi.org/10.1023/A:1011185507169

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  • DOI: https://doi.org/10.1023/A:1011185507169

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